(vi) Other domestic crude oils the first sale of which is exempt from the provisions of this part

included in the volume of domestic crude oil so sold. The certification shall also contain a statement that the price charged for the domestic crude oil is no greater than the maximum price permitted pursuant to this part. (2) Each seller of domestic crude oil, other than a producer of domestic crude oil, shall make the certification required by this paragraph as soon as practicable after receipt of the required certifications from its sellers, but in no event later than 30 days following such receipt. However, if the domestic crude oil is not sold until after the expiration of the thirty-day period, the certification required by this paragraph shall be made within ten days following the sale of the domestic crude oil.

(3) All certifications required by this paragraph shall relate only to the actual volumes of crude oil included in any mixed blend of crude oil and other refined petroleum products and residual fuel oil.

(c) No firm may sell domestic crude oil unless it provides the certification required by this section. No firm may knowingly purchase domestic crude oil for which there is no certification as required by this section; provided, however, that the provisions of this paragraph do not apply to the sale of domestic crude oil to a firm under circumstances of economic or other coercion in which the buyer, because of its need for crude oil, had no reasonable alternative but to purchase the domestic crude oil for which there is no certification, and such firm promptly reports the purchase to the Department of Energy for investigation.

(d) All certifications required by this section shall be in writing, either upon an invoice or billing or by separate instrument, and shall be effective only when delivered to and received by the purchaser of domestic crude oil.

(Emergency Petroleum Allocation Act of 1973, Pub. L. 93-159, as amended, Pub. L. 93-511, Pub. L. 94-99, Pub. L. 94-133, Pub. L. 94-163, and Pub. L. 94-385; Federal Energy Administration Act of 1974, Pub. L. 93-275, as amended, Pub. L. 94-385; Energy Policy and Conservation Act, Pub. L. 94-163, as

amended, Pub. L. 94-385: E.O. 11790, 39 FR 23185: Department of Energy Organization Act, Pub. L. 95-91; E.O. 12009, 42 FR 46267) [41 FR 36184, Aug. 26, 1976, as amended at 41 FR 37310, Sept. 3. 1976; 41 FR 43394, Oct. 1, 1976; 42 FR 62903, Dec. 14, 1977; 42 FR 64864, Dec. 29, 1977; 43 FR 33691, Aug. 1. 1978; 44 FR 25170, Apr. 27, 1979; 44 FR 25832, May 2, 1979]

EFFECTIVE DATE NOTE: At 44 FR 25170, April 27. 1979, paragraphs (a)(2)(iii) and (3)(iii) were revised, at 44 FR 25832, May 2, 1979, paragraphs (a)(2)(i), (C) and (D) were revised, paragraph (a)(2)(i)(E) was added, paragraphs (a)(3)(i), (D) and (E) were revised, and paragraph (a)(3)(i)(F) was added, effective June 1, 1979. For the convenience of the user, the superseded text is set forth below:

§ 212.131 Certification of domestic crude oil sales.

(a)(2)(ii)

(C) Crude oil transported through the trans-Alaska pipeline; and

(D) Incremental tertiary crude oil as determined pursuant to § 212.78.

(iii) The certification required under paragraph (a)(2) of this section shall be made within the consecutive two-month period immediately following the month of September 1976 or, with respect to any property from which crude oil has not been produced and sold prior to September 30, 1976. the certification required under paragraph (a)(2) of this section shall be made within the two-month period immediately following the first month in which crude oil is produced and sold.

(3) Unitized properties. (i)

(D) Increment tertiary crude oil determined pursuant to § 212.78; and

(E) Imputed stripper well crude oil, if any, determined pursuant to § 212.75(b).

(iii) With respect to each unitized property for which the producer has determined a unit base production control level, the producer shall certify in writing once to each purchaser of crude oil produced from the property:

40-025 0-79--23

(A) The highest posted price at 6 a.m., local time, May 15, 1973, for transactions in that grade of crude oil in that field, or if there was no posted price in that field for that grade of domestice crude oil. the related price for that grade of domestic crude oil which is most similar in kind and quality in the nearest field for which prices were posted; and

(B) The highest postd price on Septembert 30, 1975, for transactions in that particular grade of crude oil in that field in September 1975, or if there was no posted price in that field for that grade of domestic crude oil, the related price for that grade of domestic crude oil which is most similar in kind and quality in the nearest field for which prices were posted.

§ 212.132 Records on sequence of cost recoupments.

(a) Refiners. Refiners are required to calculate and keep records as of the last day of each calendar month for each product or group of products represented by the symbol "i" in the formulae contained in § 212.83(c) of what amount of each of the types of costs set forth in § 212.83(f) were used in computing prices for that month, and of the allocation of increased product costs to propane pursuant to

§ 212.83(c)(1)(iii)(A).

(b) Refiners that are also processors of natural gas. Refiner processors are required to calculate and keep records as of the last day of each calendar month of what amount of each of the types of costs set forth in § 212.83(f) were used in computing prices for that month, and of the allocation of increased product costs to propane pursuant to § 212.83(c)(1)(iii)(A).

[41 FR 15340, Apr. 12, 1976]

Subpart J-[Reserved]

Subpart K-Natural Gas Liquids

AUTHORITY: Emergency Petroleum Allocation Act of 1973, Pub. L. 93-159; Federal Energy Administration Act of 1974, Pub. L. 93-275; E.O. 11790, 39 FR 23185.

SOURCE: 39 FR 44412, Dec. 24, 1974, unless otherwise noted. Redesignated at 40 FR 6200, Feb. 10, 1975.

NOTE: A class exception document relating to the retroactive application of the price

rules of Subpart K was published at 40 FR 40824, Sept. 4, 1975.

§ 212.161 Applicability and relationship to other subparts.

(a) Scope. This subpart applies to all sales of natural gas liquids and natural gas liquid products, including transfers between affiliated entities, by all firms, including gas plant operators, producers of natural gas, natural gas royalty owners, and refiners, except that this subpart does not apply to sales by resellers or retailers subject to Subpart F of this part. This subpart does not apply to sales of lease or plant condensate which is defined as crude oil under § 212.31.

(b) Relationship to other subparts.(1) Gas plant operators. Refiners that only refine liquid hydrocarbons from oil and gas field gases and do not refine crude oil shall determine their maximum lawful prices pursuant to this Subpart K and are not also subject to Subpart E.

(2) Crude oil refiners which are also gas plant operators-(i) General. Refiners that refine liquid hydrocarbons from oil and gas field gases, and also refine crude oil, shall determine their May 15, 1973, selling prices and increased product and processing costs for natural gas liquids and natural gas liquid products produced in gas plants pursuant to this subpart, but shall determine their maximum lawful selling prices pursuant to Subpart E.

(ii) Calculation of increased product costs. Such refiners shall calculate the increased product costs of all natural gas liquids and the increased product costs attributable to natural gas liquid products pursuant to §§ 212.167 and 212.168, and shall add the amount of increased product costs so determined to the amount of increased product costs incurred in each month of measurement and determined to be allocable to the appropriate product category under the refiner's cost allocation formulae of § 212.83(c)(1): Provided, That the amount of such increased product costs allocable to propane prices is limited pursuant to the provisions of § 212.168(c) and § 212.83(c)(1) (ii)(F).

(iii) Calculation of increased processing costs. Such refiners shall calculate

increased processing costs attributable to natural gas processing pursuant to § 212.165, and shall add the amount of increased processing costs so determined to the amount of increased nonproduct costs attributable to refinery operations incurred in each month of measurement and determined to be allocable to prices charged for covered products pursuant to the formulae in § 212.83(c).

(iv) Calculation of increased marketing costs. Such refiners shall calculate allowable increased marketing costs pursuant to § 212.83.

(c) Sales of ethane. This subpart does not apply to sales of ethane.

(Emergency Petroleum Allocation Act of 1973, Pub. L. 93-159, as amended Pub. L. 93511, Pub. L. 94-99, Pub. L. 94-133, Pub. L. 94-163, and Pub. L. 94-385; Federal Energy Administration Act of 1974, Pub. L. 93-275, as amended, Pub. L. 94-332; Pub. L. 94-385, Pub. L. 95-70, Pub. L. 95-91; Energy Policy and Conservation Act, Pub. L. 94-163, as amended, Pub. L. 94-385, Pub. L. 95-70; Energy Conservation and Production Act, Pub. L. 94-385, as amended, Pub. L. 95-70. Pub. L. 95-91; Department of Energy Organization Act, Pub. L. 95-91; E.O. 11790, 39 FR 23185; Energy Organization Act, E.O. 12009, 42 FR 46267)

[39 FR 44412, Dec. 24, 1974. Redesignated and amended at 40 FR 6200, Feb. 10, 1975; 41 FR 9088, Mar. 3, 1976; 41 FR 15340, Apr. 12, 1976; 43 FR 43000, Sept. 21, 1978; 43 FR 50842, Oct. 31, 1978]

EFFECTIVE DATE NOTE: In § 212.161(a), the phrase "including transiers between affiliated entities," was removed at 43 FR 43000, Sept. 21, 1978. At 43 FR 50842, Oct. 31, 1978, the deletion of the phrase was suspended until further notice.

§ 212.162 Definitions.

For purposes of this subpart

"Cost of natural gas shrinkage" means the reduction in selling price per thousand cubic feet (MCF) of natural gas processed, which is attributable to the reduction in volume or BTU value of the natural gas resulting from the extraction of natural gas liquids, as determined pursuant to the contract in effect at the time for which cost of natural gas shrinkage is being measured, and under which the processed natural gas is sold.

"Firm" means a parent and the consolidated and unconsolidated entities

(if any) which it directly or indirectly controls.

"First sale" means, with respect to natural gas liquids or natural gas liquid products, the first transfer for value to a class of purchaser for which a fixed price per unit of volume is determined.

"Gas plant" means a facility in which natural gas liquids are separated from natural gas, or in which natural gas liquids are fractionated or otherwise separated into natural gas liquid products, or both. For purposes of computing increased processing costs under § 212.165, and for purposes of determining the eligibility of production from a plant to receive the prices specified in § 212.164(e), a "gas plant" includes any natural gas or natural gas liquid gathering facilities and the transportation lines (including compression stations) connecting these facilities to the actual physical plant at which the natural gas or natural gas liquids are processed: Provided, That natural gas gathering facilities and related transportation lines shall be considered a part of a gas plant for these purposes only if the first seller of the natural gas liquids or natural gas liquid products produced in the plant has no beneficial interest in the residue gas from the plant.

"Gas plant operator" means any firm, including a gas plant owner, which operates a gas plant and keeps the gas plant records.

"Gas plant owner" means any firm with an ownership interest in a gas plant.

"Groundbreaking" means the date on which the actual physical construction of a gas plant is undertaken.

"Natural gas liquids" means a mixed hydrocarbon stream containing, in whole or in substantial part, mixtures of ethane, butane (iso-butane and normal butane), propane or natural gasoline.

"Natural gas liquid products" means the separate products derived from natural gas liquids, including butane (iso-butane and normal butane), propane, propane-butane mixtures, and natural gasoline, but not ethane.

"Net-back sale" means, with respect to natural gas liquids, any transfer for

value to a class of purchaser for which a percentage of the revenues from the first sale of natural gas liquids or natural gas liquid products is received.

(Emergency Petroleum Allocation Act of 1973, Pub. L. 93-159, as amended Pub. L. 93511, Pub. L. 94-99, Pub. L. 94-133, Pub. L. 94-163, and Pub. L. 94-385; Federal Energy Administration Act of 1974, Pub. L. 93-275, as amended, Pub. L. 94-332; Pub. L. 94-385, Pub. L. 95-70, Pub. L. 95-91; Energy Policy and Conservation Act, Pub. L. 94-163, as amended, Pub. L. 94-385, Pub. L. 95-70; Energy Conservation and Production Act, Pub. L. 94-385, as amended, Pub. L. 95-70, Pub. L. 95-91; Department of Energy Organization Act, E.O. 11790, 39 FR 23185; Energy Organization Act, E.O. 12009, 42 FR 46267)

[39 FR 44412, Dec. 24, 1974. Redesignated at 40 FR 6200, Feb. 10, 1975, and amended at 43 FR 43000, Sept. 21, 1978]

§ 212.163 General price rule.

(a) First sale. A royalty owner, producer, gas plant owner, gas plant operator or other entity may not charge to (or receive from) any class of purchaser a price in excess of the weighted average price at which natural gas liquids or natural gas liquid products were lawfully priced in transactions with the class of purchaser concerned on May 15, 1973, except to the extent permitted by this subpart.

(b) Net-back sale. A royalty owner, producer, gas plant owner, gas plant operator, or other entity that transferred natural gas liquids or natural gas liquid products to any class of purchaser on May 15, 1973, in a net-back sale shall not charge (or receive) per gallon revenues for such natural gas liquids or natural gas liquid products in excess of the per gallon revenues received in such net-back sales on May 15, 1973, except to the extent that the first sale price upon which the netback amount is determined is permitted to increase above its May 15, 1973 level pursuant to this subpart, and except to the extent that the method for determining the amount of the net-back is changed, provided, however, that any change in the method of determining the amount of any netback shall not constitute an increased product cost or an increased non-product cost.

§ 212.164 Adjusted May 15, 1973 first sale price.

(a) Natural gas liquid products. For purposes of determining lawful prices of natural gas liquid products in a first sale pursuant to this subpart, a firm may use, in lieu of the weighted average price at which natural gas liquid products were lawfully priced in first sale transactions with a class of purchaser on May 15, 1973. prices of not more than $.085 per gallon for propane, not more than $0.09 per gallon for butane, and not more than $.10 per gallon for natural gasoline.

(b) Natural gas liquids. For purposes of determining lawful prices of natural gas liquids in a first sale, if the first sale price of natural gas liquids on May 15, 1973, represented a discount from the lawful first sale prices of natural gas liquid products at the nearest sales point for such products on that date, a firm may use, in lieu of the actual May 15, 1973 first sale prices of natural gas liquids, first sale prices of natural gas liquids computed on the basis of not more than $.085 per gallon for the propane content, not more than $.09 per gallon for the butane content, and not more than $.10 per gallon for the natural gasoline content, provided that the natural gas liquids first sale prices thus computed shall be reduced by the same percentage discount from the adjusted first sale prices for the component natural gas liquid products as the actual May 15, 1973 first sale prices of natural gas liquids were reduced from the actual May 15, 1973 selling prices of natural gas liquid products at the nearest sales point of the natural gas liquids purchaser for such products.

(c) Imputed May 15, 1973 first sale prices for natural gas liquid products from new gas plants where groundbreaking did not occur until January 1, 1975, or thereafter. For purposes of determining lawful prices of natural gas liquid products produced in a gas plant where groundbreaking did not occur until January 1, 1975, or thereafter, a firm may use as the weighted average price at which natural gas liquid products were lawfully priced in first sale transactions on May 15, 1973, prices of not more than $.12 per gallon for propane, not more than $.12.5 per

gallon for butane, and not more than $.13.5 per gallon for natural gasoline.

(d) Imputed May 15, 1973 first sale prices for natural gas liquids from new gas plants where groundbreaking did not occur until January 1, 1975, or thereafter. For purposes of determining lawful prices of natural gas liquids produced in a gas plant where groundbreaking did not occur until January 1, 1975 or thereafter, a firm may use as the weighted average price at which natural gas liquids were lawfully priced in first sale transactions on May 15, 1973, prices computed on the basis of not more than $.115 per gallon for propane content, not more than $.12 per gallon for butane content, and not more than $.13 per gallon for natural gasoline content.

(e) Imputed May 15, 1973 first sale prices for natural gas liquids and natural gas liquid products produced in gas plants where additional capital expenditures have been made on January 1, 1975 and thereafter. (1) For purposes of determining lawful prices of natural gas liquids and natural gas liquid products produced in a gas plant where additional capital expenditures have been made on or after January 1, 1975, resulting in an increase in either the volumetric capacity of the plant or the extraction capability of the plant, a firm may use, in determining the weighted average price at which natural gas liquids and natural gas liquid products were lawfully priced on May 15, 1973, first sale prices which exceed the adjusted May 15, 1973 first sale prices otherwise permitted to be used under this section by not more than $.035 per gallon, provided that:

(i) The imputed May 15, 1973 first sale prices permitted under this section may exceed the adjusted May 15, 1973 per gallon prices otherwise permitted by an amount which is in the same proportion to $.035 as the increase in the book value of the plant attributable to the capital expenditures is to the total book value of the plant after the expenditures were made; and

(ii) The total amount of capital expenditures made must be equal to or greater than 50 percent of the original cost of the plant.

(2) For purposes of determining lawful prices of natural gas liquids and natural gas liquid products produced in a gas plant where additional capital expenditures have been made on or after January 1, 1975, resulting in the accommodation of a natural gas stream which could not otherwise have been processed in the plant, a firm may use, in determining the weighted average price at which natural gas liquids and natural gas liquid products were lawfully priced on May 15, 1973:

(i) Prices which are computed in accordance with the provisions of paragraph (d)(1) (i) and (ii) of this section;

or

(ii) Natural gas liquid product prices of not more than $.12 per gallon for propane, not more than $.125 per gallon for butane, and not more than $.135 per gallon for natural gasoline, and natural gas liquid prices of not more than $.115 per gallon for the propane content, not more than $.12 per gallon for the butane content, and not more than $.13 per gallon for the natural gasoline content, provided that these imputed May 15, 1973 first sale prices may be used only with respect to production attributable to the newly accommodated natural gas stream.

[39 FR 44412, Dec. 24, 1974. Redesignated at 40 FR 6200, Feb. 10, 1975, and amended at 40 FR 39853, Aug. 29, 1975; 41 FR 24113, June 15, 1976]

§ 212.165 Increased processing costs.

(a) Rule. Subject to the limitations and requirements set forth in this section, a firm may increase the first sale price of natural gas liquids and natural gas liquid products which it sells to reflect, on a dollar-for-dollar basis, increased processing costs which it has incurred since the firm's base quarter. For purposes of this section, the base quarter for any firm is that fiscal quarter which includes the month of May 1973, except that if the firm commenced gas processing operations after May 1, 1973, the base quarter is the first full fiscal quarter of the firm after the the commencement of gas plant production.

(b) Calculation of increased processing costs. (1) For any firm, processing